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<nettime> "An outrageous defeat, not for Greece, but for the European pr
sebastian on Tue, 14 Jul 2015 16:17:11 +0200 (CEST)

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<nettime> "An outrageous defeat, not for Greece, but for the European project"

Full transcript of Yanis Varoufakis' other "first interview since
resigning", on Australian radio this Monday.


"An outrageous defeat, not for Greece, but for the European project"

Phillip Adams: A week ago, a group of very high-profile progressive
economists, Stiglitz et al, wrote an open letter to German chancellor
Angela Merkel, saying right now, the Greek government is being asked to
put a gun to its head and pull the trigger. And the past week hasn't
changed that scenario. Greece went very close to pulling the trigger
when it went to Brussels with a suite of suggestions that many saw as
capitulation, and a betrayal of the previous week's No vote in the
referendum. But as we've heard, a third bailout deal has been struck to
keep Greece within the Eurozone, and already the labor minister has
denounced the terms and reported that the conditions are so tough, so
rough, that it poses a perhaps impossible political task to the prime
minister. Former finance minister Yanis Varoufakis joins me now for his
first post-resignation interview. Now, I've got to ask you this... Did
you jump or were you pushed?

Yanis Varoufakis: Something in between. I jumped more than I was pushed.
On the night of the referendum, I entered the prime ministerial office
elated. I was traveling on a beautiful cloud, pushed by the beautiful
winds of the public's enthusiasm for the victory of Greek democracy
during that referendum. The moment I entered the prime ministerial
office, I sensed immediately a certain sense of resignation, a
negatively charged atmosphere. I was confronted with an air of defeat,
which was completely at odds with what was happening outside. And at
that point, I had to put it to the prime minister: If you want to use
the buzz of democracy outside the gates of this splendid building, you
can count on me. But if on the other hand, you feel you cannot manage,
you cannot handle this majestic No to a rather irrational proposition
from our European partners, then I'm going to simply steal into the
night. And I could see that he didn't have an attitude, he didn't have
what it took sentimentally, emotionally, at that moment, to carry that
No vote to Europe, to use it as a weapon. So in the best of possible
spirits - the two of us get on remarkably well, and will continue to get
on, I hope - I decided to give him the leeway that he needs in order to
go back to Brussels and strike what he knows to be an impossible deal, a
deal that is simply not viable.

PA: Is that why you have disappeared from public view since?

YV: Yes, I thought that the best support I could offer the prime
minister and my dear colleague Euclid Tsakalotos who succeeded me in the
ministry of finance, was to keep quiet, to send them my best regards and
my comradely wishes, with some pieces of advice regarding particularly
the kind of debt restructuring that the country needs as a minimum
requirement for retaining its hope for the future, and to keep quiet
while they were having a terrible time, an inhuman time, inhumanly
terribly time in these meetings. I know very well what it feels like to
walk inside those neon-lit, heartless rooms, full of apparatchiks and
bureaucrats who have absolutely no interest in the human cost of
decision making, and to have to struggle against them in order to come
back with something that is palatable.

PA: You have paid a very heavy personal price. It's been quite
extraordinary  watching your political enemies in Europe focus on you
again and again, and hammer away at you, with every tool in the box.

YF: Well, I had to pay the price, I'm quite happy to have paid that
price, I paid it with pride... of having killed the Troika, remember?
One of the first meetings that I had in office was with the president of
the Eurogroup, Mr. Jeroen Dijsselbloem. And when I explained in public,
in the press conference that followed our meeting, that Greece would no
longer be subject to the invasions in our ministries, of technocrats
hell-bent on determining the minutiae of every policy that is decided in
Greece, I was told in certain terms that I had just crossed the line,
and there was a public display of disaccord between us. When he went
into my office, he whispered: You have just killed the Troika. And I
responded: I am very glad to have done this. This is why I was elected.

PA: Will you stay in politics?

YV: Of course I will. The decision to enter politics was a difficult
one. But I had to look the electorate in the eye and say to them that
now that I'm taking this plunge, I'm not a fair weather sailor, I'm
going to be here for the course, and I'm going to represent you through
thick and thin. And in essence, I'm actually very much enjoying being a
back-bencher at the moment, because I have a lot more room for maneuver
and speaking the truth, without having to worry about phrasing the truth
in diplomatic terms. Not that I did much of that, but now I don't even
have to try. And I was rewarded with 140,000 votes, I got the most votes
of any member of parliament in Greece last January, and I'm going to
honor these 140,000 people.

PA: Oliver Hartwich was on the program the other night, arguing that
Greece should never have joined the EU, with the wisdom of hindsight. Do
you agree?

YV: Well, not just with hindsight. In the late 1990s, even though I was
living in Australia, in Sydney, if you recall, I was waging a campaign
against Greece's entering the Eurozone. That argument has never faded,
I've always made the point, that whereas it is extremely fool-hearted
and tough to get out of the Eurozone, the Eurozone is not a member to
which we would have belonged in the first place. And by the way, I did
hear the Hartwich interview, and you introduced him by saying that he
would probably offer a very different view to mine, but in the end he

PA: I go back to this strange meeting with your prime minister, and his
negativity. There is an argument, often stated, that he wasn't expecting
a No vote.

YF: Well, I have to say that I wasn't expecting a No vote either. Let me
be clear about this. I knew that the moment we announced the referendum
on that Friday night, that if a referendum were to take place that night
or the day after, we would have won decisively. But we also knew that
the Central Bank, instructed by the Eurogroup, would punish us for being
audacious enough to ask the Greek people to pass judgement on the
ultimatum they had given us, by shutting down the banks on Monday
morning. And given that the referendum would take place on the following
Sunday, after a whole week of banks that were boarded up, and ATMs that
would churn out a maximum of 60 Euros per card per person per day, I had
assumed, and I believe so had the prime minister, that our support, and
the No vote, would fade exponentially. But the Greek people overcame
fear, they set aside their pecuniary interests, they ignored the fact
that their savings could not be accessed, and they gave a resounding,
majestic No to what was in the end an awful ultimatum on behalf of our
European partners.

PA: Well, this will make it all the harder for him to push this through,
to avert the state bankruptcy. He's got to do it in a rush. Humiliation
is piled onto humiliation. Tax hikes, pension reform, spending cuts, et
cetera. He can't win this, can he?

YV: Well, this is indeed the politics of humiliation. The Troika have
made sure that they will make him eat every single word that he uttered
in criticism of the Troika over the last five years. Not just these five
months, six months during which we've been in government, but of the
five years prior to that. This has nothing to do with economics. It's
got nothing to do with putting Greece back on the rails towards
recovery. This is a new Versailles Treaty which is haunting Europe
again, and the prime minister knows it. The prime minister knows that
he's damned if he does and he's damned if he doesn't.

PA: Lets look at one of these things, at one of the humiliations. Greece
has to put 50 billion Euros of state assets in a trust beyond Greek
reach, under European supervision, to be sold off to pay down debt. This
is just... sovereignty is evaporating.

YV: Well, you've been around long enough to remember the 1967 coup
d'??tat. You will recall that the choice of weapon used in order to
bring down democracy then was the tanks. Well, this time it was the
banks. The banks were used by foreign powers to take over the
government. In '67 they used the tanks to take over the government. The
difference is now that this time, they're also taking over all remaining
public property. They're putting it in a company that is going to be
domiciled in Luxembourg [laughs]. And the Greek government is going to
have to sell all of it, according to a specified timetable, give 50
percent of it back to the Troika for repaying unpayable debt, use
another part of it to recapitalize the banks, without ever having any
control over the banks. The banks remain completely under the control of
the oligarchs who brought the country to its knees a few years ago. And
only if and when a few Euros remain from these sales - and I can assure
you that there won't, because the projected price is just outrageously
high - if that turns out to be untrue and a little bit of money is left,
that money is going to go into some kind of public investment. But there
will be none left. So this is... how should I put it... you're right,
it's a complete annulment of national sovereignty.

PA: You've got some pretty good terms and phrases, tanks and banks.
You've also come up with the notion of economic asphyxiation. Now this
asphyxiation has been going on steadily for almost five years.

YV: That is correct. I call it something else too, remember, I use the
term which I think you liked a couple of years ago: fiscal
waterboarding. So, imagine that the Greek government's head is submerged
in water, CIA-like. And then the moment it's about to perish, to die,
it's allowed to come up for a gasp of air and pushed back into the water
of fiscal austerity. This is done in a variety of ways. But what is
going to follow in the next few weeks and months is going to be a far
worse version of fiscal waterboarding.

PA: Well, you might have some pleasure in the fact that Merkel's got a
few problems with this, because if this manages to get through the Greek
parliament, there is no guarantee the German parliament would allow
Merkel and Schäuble to start talks on the bailout plan.

YV: Which is amazing, isn't it? We've been asked to effectively
humiliate ourselves as a government, to introduce all sorts of bills
that run completely against our mandate, on the promise that maybe the
Bundestag is going to approve another bailout which is going to make our
debt even more gargantuan than it is, and our economy even less
sustainable than it is. It is mind-boggling. I don't think that that the
European Union has ever made a decision that undermines so fundamentally
the project of European integration. It's an outrageous defeat, not for
Greece, but for the European project. And it was a defeat of the
European project that was ditched out by the European union. This is
going to be remembered by historians in the future in exactly the same
way as the Versailles treaty was in 1919.

PA: It's a very interesting parallel. Now, you're not alone in being
very unhappy with the backdown. I've named the labor minister in the
introduction. So the majority is now looking very wobbly. Is it possible
that a snap election could be on the cards?

YV: Well, I wouldn't rule it out. I haven't spoken to Alexis Tsipras, I
will speak to him soon, when he comes back. He's on his way back to
Athens as we speak. I just want to see what he is thinking.

PA: Perhaps he won't come back. Perhaps he'll do a run now.

YV: No, he's not the running type, he will come back, and he will face
the music. I just can't believe - from the extent that I know him, and I
think I know him quite well - that he will stand in front of parliament,
saying: Well, this was the best I can do, vote for it. Maybe he would.
But I would be very surprised if he does that. I would be very surprised
if he wants to stay on as a prime minister over this crime against

PA: Schäuble has been less than helpful, of course. He came into the
weekend talks expecting "exceptionally difficult negotiations", saying
the figures the Greek submitted were not believable, while others were
saying just the opposite. Can you explain why the finance minister seems
to be seeking the dreaded Grexit?

YV: I have a great deal of respect for Wolfgang Schäuble. I think he is
the only person around the Eurogroup who has a plan. I have just written
an article about this which will appear in the German newspaper Die Zeit
on Thursday. Look, lets be frank here, these are crucial moments,
critical moments in European history, and I don't believe that we will
be judged anything other than harshly if we don't speak out at this
moment. Wolfgang Schäuble wants Grexit. He has been planning for it, he
considers it to be an essential aspect of his plan for Europe, for a
kind of political union that is now missing, a very specific kind of
union, a disciplinarian one, one that is not a federation, but one that
is based on the capacity of a single fiscal overlord to veto national
budgets, and therefore to annul national sovereignty. And he thinks that
Grexit is essential for this. Because a Grexit would create the fear in
the minds and hearts of French and Italian politicians in particular to
force them to acquiesce to the Schäuble plan.

PA: So you are saying that Greece is simply a pawn on the board?

YV: Well, it is. So what we have here is a major clash of titans,
between Dr. Schäuble on the one hand and Paris and Rome on the other.
The chancellor, Angela Merkel, has not committed one way or the other.
And Dr. Schäuble, who has been around for a very long time, he's been
here in the center of the Euro project from its inception, he is not
happy with the way that the monetary union was not accompanied by a
political union. He would probably like to have a federation, but he
feels that he doesn't have the political power to create one. So he is
calling for what he considers to be - not me - what he considers to be
the second best, which must, in his mind, involve a Grexit that will
inspire sufficient fear in Paris and Rome, and possibly in Berlin too,
in order to bring about that disciplinarian, negative political union.
Negative in the sense that the overlord, the equivalent of the federal
treasure, will only have negative powers, powers to veto national
budgets, but not creative powers, powers to transfer surpluses and to do
a Marshall plan, lets say. And the reason why I'm saying all this is not
because I have a theory, it's because Dr. Schäuble has told me so.

PA: You and I had joked - or I had joked, and you'd been rueful about it
- about the idea of going back to the Drachme. I was accusing of
secretly printing them in the cellar. And you made the point in our last
conversation that you had been required to smash the machines. Now, if
you do have to create a new currency from scratch, you point out in a
very fine essay, which I have in front of me, that in occupied Iraq, the
creation of new paper money took almost a year, 20 or so Boeing 747s,
the mobilization of the U.S. military might, three printing firms and
100 trucks. What's happening? Is there a plan for this?

YV: Well, let me be open and clear on this. The introduction of a
national currency, you just read an example of how hard it is, is a
nightmare. There is no doubt about that. Now as a responsible
government, knowing full well that there was a very significant alliance
within the Eurogroup whose purpose was to throw us out of the Euro, we
had to make contingencies. We had to have a team, a small team of
people, in secret, who would create the plan in case we were forced -
not in case we chose, but in case we were forced - to exit the monetary
union known as the Eurozone. Now of course, you realize that there is a
conundrum here. Once this plan begins to get implemented, that is, you
go from five people working on it to 500, which is the minimum you need
in order to implement it, then it becomes public knowledge. The moment
it becomes public knowledge, the power of prophecy creates a dynamic of
its own. And then you're out of the Euro before you realize it. We never
made that transition from five to 500, we never felt we had a mandate to
do it, we never planned to do it. We had the design on paper, but it was
never activated.

PA: The Economist this weekend argued for a temporary Grexit. If the
Europeans allowed the Greeks, temporarily, to introduce an emergency
parallel currency, Greece might in effect suspend its membership in the
single currency without technically leaving. A fantasy?

YV: Well, if it is a fantasy, it's also Dr. Schäuble's fantasy, because
this is precisely what he proposed to me. This is what he proposed to me
in a number of meetings we had, he called it "timeout", it's his
expression. For us, it was a fantasy. The moment you begin the
deconstruction of a monetary union, you are unleashing powers that you
cannot control. And it takes incredible folly to think that you can
control it. And this is why we rejected the proposal. It's a proposal
that we would never have accepted as committed Europeanists. We believed
that, setting aside the very significant costs for the Greek social
economy, that this kind of plotting, these kind of stratagems, are part
of the process of killing off European integration. And it's an
outrageous defeat of the European project, as I said before.

PA: Quite a number of the leading economists I mentioned earlier wrote
their open letter to Merkel, warning: "History will remember you for
your actions." Now isn't she mindful that Germany was in an almost
identical position after World War Two, and that the debt was forgiven?

YF: Well, this is a question that you have to pose to her. I had hoped
that she would. Mind you, I've also been told by various German
politicians, and various German colleagues who are just as worried as I
am about the impact of the last few months and years on European unity
and Germany's position within a united Europe, I've been told that they
decry the fact that the German political elite no longer contains
somebody like Helmut Kohl, somebody like Helmut Schmidt, that is,
leaders who knew it in their bones that toying with the integrity of the
European union for strategic purposes was running in the face of the
historical duty to remember the Second World War and the great efforts
put into bringing about European unitiy after the end of the war. And as
you said, what happened after the war was that the United States of
America decided that bygones were bygones. Germany had to be
rehabilitated. You remember the speech of hope that was delivered by
Byrnes in 1956 in Stuttgart, which effectively allowed the Germans to
start believing again in a future in which their rewards would be
commensurable with their efforts. This is what Greek has been asking
for. I even wrote an article asking for a speech of hope that Mrs.
Merkel could deliver in any city in Greece of her choosing, that would
mark a magnificent turnaround in Europe. It would be the end of the Euro
crisis and the beginning of a new phase of European integration. Instead
of that, we had the politics of humiliation, we had effectively terms of
surrender being delivered to our prime minister, who was being told:
either you sign on the dotted line, or your banks will never open again.

PA: Angela Merkel as a dominatrix, Madame Leash... Now I know you
podcast a program from time to time, and you might have heard us
discussing the Argentinian default. And as you know, the warnings were
dire that the country would spiral into permanent crisis,
hyperinflation, et cetera. That didn't quite happen. Is it possible that
the effects of a Grexit are being overstated?

YF: Well, up until now, my answer would have been: No. But reading the
documents that were delivered to our prime minister, and which he had to
sign or else... this particular set of proposals about Greece now
guarantees that even if they are accepted by the parliament, and even if
they are implemented fully, our social economy is going to fade, shrivel
and die. So I'm tempted to say that however awful Grexit might be, the
point we have reached now, the juncture in which we find ourselves now,
is not one that allows me to reject the notion that a Grexit may not be
the worst possible outcome. And also let me make an analytical point. At
the moment, we already have a quasi departure from the Euro. If you were
in Greece and you had your money in a bank, you wouldn't have access to
it. You would be able to shift it about, using e-banking, from one Greek
account to another, you could make payments into other Greek accounts,
but then, you don't have access to it. You only have access to 60 Euros
of paper money per day. Now that creates de-facto a dual currency
system, I call it bank Euros and paper Euros. You have bank Euros which
are trapped inside the banking system, and you have paper Euros. And the
two very soon are going to establish some kind of exchange rate between
them. So, we are in unchartered territory.

PA: You mentioned the colonels in your opening statement. As it happens,
I was in Athens that day, I was staying in a hotel on Constitution
Square, and so my memory is haunted by the horrors of that era, and the
possibility that the political turbulence in Greece could lead to the
same sort of terrifying polarities. It's something you and I have
discussed before you took up your high post in Athens. Your concern has
always been that there will be a surge of the ultra-right.

YV: Well, when I go to parliament, I have to look at the right hand side
of the auditorium, where more than ten Nazis sit, representing Golden
Dawn. If our party, Syriza, that has cultivated so much hope in Greece,
to the extent that we managed to score 61.5 percent in the recent
referendum, if we betray this hope, and if we bow our heads to this new
form of postmodern occupation, then I cannot see any other possible
outcome than the further strengthening of Golden Dawn. They will inherit
the mantle of the anti-austerity drive, unfortunately, tragically. And
therefore, I seriously believe what I said to you before. The project of
a European democracy, of a united European democratic union, has just
suffered a major, major catastrophe.

July 13, 2015


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